Suharnan v Brookfields - [2013] NZHC 191

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-5830 [2013] NZHC 191

BETWEEN SIVASUNDARAM SUHARNAN First Plaintiff

ANDSUVIKEN LIMITED (IN LIQUIDATION) Second Plaintiff

ANDBROOKFIELDS First Defendant

ANDKENNETH MARTIN JOHNSTON Second Defendant

Hearing: 4 February 2013

Counsel: KA van Houtte for first defendant
TA Chubb for first plaintiff

Judgment: 13 February 2013

JUDGMENT OF ASSOCIATE JUDGE FAIRE

[on applications to strike out and for summary judgment]

This judgment was delivered by me on 13 February 2013 at 4:30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Foley & Hughes, PO Box 6829, Auckland
Kennedys, PO Box 3158, Auckland 1140

SUHARNAN V BROOKFIELDS HC AK CIV-2011-404-5830 [13 February 2013]

CONTENTS

The applications ....................................................................................................... 3

The pleadings ........................................................................................................... 3

Background .............................................................................................................. 4

The principal grounds advanced in support of both substantive parts of the application ................................................................................................................ 7

The court’s approach to a strike out application ...................................................... 8

The court’s approach to a summary judgment application by a defendant .............. 9

The opposition........................................................................................................ 10

Analysis of the substantive grounds........................................................................11

Conclusions ............................................................................................................ 20

Costs ....................................................................................................................... 21

Further steps in this proceeding ............................................................................. 21

The applications

[1] The first defendant applies for orders:

(a) Striking out the claim against the first defendant;

(b) Leave to apply for summary judgment against the first plaintiff; and

(c) For summary judgment against the first plaintiff.

[2] A number of preliminary matters relating to the application were resolved and were the subject of my minutes of 3 and 17 December 2012 and therefore require no further comment. I proceed on the basis set out in those minutes.

The pleadings

[3] The first plaintiff pleads that he is a director and 50 per cent shareholder of the second plaintiff.

[4] The second plaintiff is a company incorporated on 28 July 2005 under the

Companies Act 1993. It was put into liquidation by the High Court on 30 January

2009. Gerald Rea and Paul Sargison were appointed its liquidators.

[5] The first defendant is a firm of barristers and solicitors. The first defendant, it is alleged, was instructed by the second plaintiff regarding the purchase of a property and the execution and registration of a mortgage to the ASB Bank Ltd in August 2005. Two causes of action are pleaded against the second defendant. They are respectively the second and third causes of action in the statement of claim. They are not directly affected by the application that I now consider.

[6] In the second cause of action the first plaintiff pleads against the second defendant that it breached an oral agreement that the first plaintiff and the second defendant made relating to an investment in a property.

[7] In the third cause of action, the second plaintiff pleads that it lent money to the second defendant of which it now seeks the return.

[8] The first cause of action, which is the subject of the application for strike out and summary judgment, states that the first defendant owed a duty of care to the first…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NZHC 191
Decision Date: 13 February 2013

CaseChat Overview and Summary

Suharnan v Brookfields is a case in which the first plaintiff, Sivasundaram Suharnan, brought an action against the first defendant, Brookfields, for damages arising out of the first defendant's alleged negligence in the execution and registration of a mortgage in favor of the ASB Bank Ltd. The first plaintiff is a director and 50 per cent shareholder of the second plaintiff, Suviken Limited, a company that was placed into liquidation. The first defendant is a firm of barristers and solicitors. The first plaintiff claims that the first defendant was negligent in carrying out tasks related to the execution and registration of the mortgage, resulting in loss and damage. The first defendant seeks to strike out the first plaintiff's claim and for summary judgment.

The central legal issue in this case is whether a solicitor can owe a duty of care to a shareholder who is not a client of the solicitor. The court considered the principles of proximity and wider policy considerations when determining whether a duty of care should be imposed. The court found that there was a reasonably arguable cause of action against the first defendant and that it was just and reasonable to impose a duty of care in this situation. The court also found that the statutory background, including the Companies Act 1993 and the Land Transfer Act 1952, strengthened the existence of a duty of care.

The court dismissed the first defendant's application for strike out and summary judgment, finding that the first plaintiff's claim was not so clearly untenable that it could not possibly succeed. The court also found that it was not justified in striking out the cause of action of the first plaintiff against the first defendant and that the entry of summary judgment in favor of the first defendant was not justified. As a result, the first defendant's application was dismissed. The court reserved costs for further discussion between counsel.

Orders